The Business Women in Education ‘Return on Development’ conference brought together an array of experts and providers to discuss the threat posed by Covid-19 to the early years investment landscape and the opportunities that remain for the sector. Briony Richter reports
With Covid-19 interfering with everything we try to do nowadays, the Return on Development’ conference this year had to be held virtually, but still attracted 200 registered delegates who logged on to join chief executives, directors, investors and strategy experts from all over the world, to take part in a series of high-energy webinars and presentations.
Hosted by EducationInvestor Global and NMT, the event was kicked off by EY-Parthenon associate partner Anna Grotberg, who said that, despite the pandemic, the early years sector remains an attractive market in which to invest.
The increase in dual working households and flexible working is shaping a new model of childcare, she said. “Ultimately, flexible working can provide a different opportunity for providers to create a unique and different model. There are some families that have cut down hours, but we expect to see the sector grow steadily and organically.”
The opening panel, chaired by Grotberg, comprised early years experts who considered the ways nurseries will change post Covid-19.
Kido Education’s founder and chief executive Aniruddh Gupta described an evolving landscape, especially in Asia and the Middle East. Prior to the pandemic, these regions didn’t prioritise external childcare as highly as Europe and the US, and his virtual Kido Home pre-school aims to meet what he called a rising demand for virtual early years education.
Technology is changing the childcare model to bridge a gap in countries in which parents are more reluctant to send children to nurseries. Panellists agreed that how we communicate with parents, staff and children has changed for good, and a number of different childcare models will emerge.
David Hancock, chief executive of A Step Ahead Nurseries, and Ros Marshall, UK managing director at Bright Horizons, stated that communication and technology has been critical to the survival of the sector during the pandemic, however face-to-face provision, rather than virtual, remains the priority.
Arun Kanwar, partner at event sponsor Cairneagle Associates, said that commuter belt nurseries have been hit hard, which may get worse as unemployment hits new highs. That being said, the sector tends to rebound quickly following recessions and is typically more resilient than other industries.
Distress in the market does create buying opportunities and the market is expected to consolidate faster.
In the pandemic’s early days, M&A volume dived, Rob Simpson, partner at Apiary Capital explained, adding that investors are still looking for those resilient settings that, despite having cashflow problems, still have a viable model.
During a panel about misconceptions of early years’ investment, the panellists agreed that finding the right financial partner comes down to more than just the investment.
Andy Morris, chairman at Little Garden Day Nurseries, said he has experienced both productive and unproductive financial partnerships. Now he ensures his ethos and goals for nurseries are highlighted with potential investors – and so far, there’s been a lot of support. Clare Roberts, chief executive of Kids Planet, is bankrolled by private equity – but stressed that, right from the start, staying in control of key decisions and delivering quality was crucial to a symbiotic relationship.
The UK early years sector remains attractive for investors. Simone Rensch, deputy editor of EducationInvestor Global, spoke to experts across the Middle East about the region’s investment opportunities and state of play.
The United Arab Emirates is heavily regulated and government bodies ensure all workers are highly trained and qualified. However, the rules for reopening the sector this month have been criticised by many providers.
Lama Chivi, chief executive, Middle East and India at Babilou Group, explained that being a bigger group helped it survive through lockdown, but strict reopening guidelines are hurting the sector with settings predicted to close. However, Afra Al Qamzi, director of forward education at Dubai’s education watchdog KHDA said he is working with providers to achieve more regulatory synergy across the sector, and to allow more realistic staffing and capacity goals.
Gender and diversity
It’s generally accepted that diverse workforces provide long-term benefits for companies and society, generating more creativity and better problem-solving, with different viewpoints bringing a variety of perspectives and life experiences to the table.
The early years sector is dominated by women, often due to low salaries, external perceptions of the role of the sector and, in some jurisdictions, legislation around caring for young children. Men make up just 3% of the workforce; however, at board level, male representation is significantly higher.
A panel on creating successful diverse management teams explored the methods for building them and what might be holding the sector back.
Mike Thompson, founder and chairman of Childbase Partnership, and Jean-Emmanuel Rodocanachi, founder and chief executive at Grandir Group, both highlighted the deep lack of value afforded the sector, which is frustrating, especially when trying to boost staff confidence. All agreed that communication is also absolutely vital for taking care of staff and for having an open dialogue about gender diversity
To progress diversity, the sector needs a systemic approach, including developing an inclusive culture and inclusive approaches to employment policies and practices. Ultimately, action must be delivered following the principles of equal opportunity, fairness and transparency.
An expert panel appraised the evolving lending landscape and explained why there’s still appetite for growth.
Event sponsors, OakNorth Bank’s senior director, debt finance, Mohith Sondhi, said despite the challenges, there’s still optimism for the sector: ‘In January and February, everyone was talking about all the opportunities. Then, Covid came along and it’s been difficult for people who had to adjust to the new normal. But, from a lending perspective, it’s actually been very strong for us as a business and we still think there are interesting opportunities within the market.’
There is a difficult economic backdrop that will ultimately affect the sector. However, the need for childcare remains – and forging a relationship with a financial partner that understands and supports providers’ goals will ultimately strengthen the industry in satisfying that demand.